Ryanair's profit dropped 18% to €1.79bn in the first half of the fiscal year, as well as dropping 6% to €1.4bn for the quarter ending September 30, 2024. This comes despite traffic in the first half and second quarter both increasing 9% over last year - totalling 115 million passengers in the first half of the year and 59.8 million in the second quarter. Ryanair said the traffic growth was offset somewhat by “repeated Boeing delays”.
The drop was driven by lower fares, the airline said in its report. The average fare fell 10% to €52 in the first half of the year and 7% to €61 in the September quarter. Ryanair's load factor was flat at 95% in the first half of the year.
Ryanair Group CEO Michael O'Leary said in its earnings call: “The good news is more people were flying with us, albeit at lower fares. Consumers were getting a better deal, but we were taking enormous market share from competitors across most markets in Europe.”
The airline had reported a 46% drop in profit to €360 million in the previous quarter. This was attributed to the timing of the Easter holidays and softer than expected pricing for the summer holidays. Easter holidays had moved into the fourth quarter of the previous fiscal year. O'Leary said this had “really damaged” the first quarter performance.
The group had restarted share buybacks in May, with €700 million completed in August and expects the €800 million follow-on programme to be completed by the middle of next year. It also declared a dividend of €0.223 per share, which is payable in February 2025.
Revenues climbed 6% in the September quarter to €3.4bn and was up only 1% in the first half of the financial year to €8.7bn. Operation costs were up 6% in the quarter to €3.4bn and up 8% in the first half to €6.7bn. O'Leary said operating costs had “performed well”.
He added: “Fuel hedge savings offset higher staff and other costs due, in part, to Boeing delivery delays. While modest delay compensation was received in the first half (mainly maintenance credits) this does not offset the substantial impact of over 5 million passenger shortfall in FY25 due to these delivery delays."
The company has hedged 85% of fuel for the second half of the fiscal year at $79 per barrel. It also took advantage of the “recent weakness in oil” and has now hedged 75% of FY26 at $77 per barrel.
In its call, Ryanair CFO Neil Sorahan said the company still expects to receive its first MAX 10 in 2027.
“The MAX 10 won't be certified until the MAX 7 is certified,” he said. “As things are going, we understand that the MAX 7 is on track to be certified in the first half of 2025. If that happens, there's a very good chance that the MAX 10 will be certified in the second half of 2025. That will put us on the road to receive our first MAX 10 in the first half of 2027."
The airline had ordered 300 new MAX 10 aircraft - consisting of 150 firm and 150 options - in 2023. The deal was valued at over €40bn. The aircraft were scheduled to be delivered between 2027 and 2033.
As of the quarter's end, it had 608 aircraft in its fleet - 580 of which are unencumbered. It finished the first half of the year with over €3.3bn in cash and €600 million of net cash. Its total liabilities and shareholders' equity was €16.4bn at the end of the first half. It is rated BBB+ from both S&P and Fitch.
“The strength of our balance sheet is a huge competitive advantage over everybody else,” Sorahan said in the call. “Our competitors are raising very expensive long-term leases, very expensive debt in the market. We're funding ourselves out of cash, which is the cheapest form of finance at the moment.
“If there are cheaper forms of financing out there, whether it's the bond market, JOLCO, sale-and-leaseback… we'll look at that. Ultimately, the lowest cost will decide what way we finance ourselves over the coming years.”
As of October 31, 2024, it had 172 737-8200 'gamechangers' in its fleet. It said it now expects the remaining nine third quarter deliveries to be pushed back to the fourth quarter of the fiscal year due to Boeing's ongoing strikes. It added that the “risk of further delivery delays remain high” and will continue to work with Boeing to accelerate aircraft deliveries.
The company said in its report: “We believe it is therefore sensible to moderate Ryanair's FY26 traffic growth target to 210 million passengers (previously 215m) to reflect these delivery delays, as we wish to avoid being over-scheduled, over-crewed and over costed.” Ryanair is continuing to target passenger growth of 8% for the full fiscal year, totalling around 198 million and 200 million passengers.
With fuel hedging, strong interest income, and aircraft delay compensation: Ryanair expects unit costs be flat for the full year.
“Forward booking suggest that third quarter demand is strong and the decline in pricing appears to be moderating,” Ryanair read in a statement. “We remain cautious on third quarter's average fare outlook, expecting them to be modestly lower than third quarter prior year.”
The company said there is “zero Q4 visibility” at present, though it added that the period will not benefit from early Easter period in 2024. It added that ongoing geopolitical conflicts, air traffic control staff shortages and capacity restrictions, and Boeing delivery delays may prove significant headwinds for the remainder of the fiscal year. It is still guiding a full year capital expenditure excluding fuel to be around €2.3bn for the full fiscal year - provided that Boeing deliveries remain on time.
The airline also reported its October 2024 traffic, noting a 7% increase in passengers to 18.3 million passengers for the month. In addition, load factor was flat at 93% for the month, when compared to October 2023.